Amazon wins court fight against $303 mln EU tax order

Amazon yesterday won its fight against an European Union order to pay about US$303 million in back taxes to Luxembourg.

Amazon yesterday won its fight against an European Union order to pay about 250 million euros (US$303 million) in back taxes to Luxembourg as Europe’s second highest court dealt a blow to the bloc’s efforts to make multinational corporations pay more tax.

The Luxembourg-based General Court said Amazon had not enjoyed a selective advantage in its tax deal with the Grand Duchy.

“The (European) Commission did not prove to the requisite legal standard that there was an undue reduction of the tax burden of a European subsidiary of the Amazon group,” the judge said.

Amazon in a statement welcomed the ruling, saying it was in line with its “long-standing position that we followed all applicable laws and that Amazon received no special treatment”.

The Amazon decision is a blow for European Competition Commissioner Margrethe Vestager, who has aggressively used the bloc’s state aid rules to tackle sweetheart tax deals between MNCs and EU nations.

Vestager has a mixed record so far in her fight against taxation deals the Commission regards as unfair.

In a separate case, French utility Engie yesterday lost its appeal against an EU order to pay back taxes of 120 million euros to Luxembourg.

But the win against Engie pales beside last year’s setback when the General Court threw out Vestager’s order to iPhone maker Apple to pay 13 billion euros in Irish back taxes. The Commission appealed against that decision in September.

Vestager has, however, successfully made Ireland, Luxembourg, the Netherlands and Belgium change their tax ruling practices, and spurred the Organization for Economic Cooperation and Development to aim for a global deal on how MNCs are taxed.

The OECD said last week that the chances of a global deal had never been higher.

The Commission, in its 2017 ruling, knocked down yesterday, said that Luxembourg spared Amazon from paying taxes on almost three-quarters of its profits from EU operations by allowing it to channel profits to a holding company tax-free.

Since the 2017 ruling, Amazon’s fortunes have soared. The United States online retailer reported US$8.1 billion in first quarter profits, a record, as consumers turned to it for their shopping needs during the COVID-19 pandemic.

In its 2018 decision on Engie, the EU said the arrangement with Luxembourg authorities artificially reduced the company’s tax burden, which meant it paid an effective corporate tax rate of 0.3 percent on certain profits in Luxembourg for about a decade.

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